I'm an associate editor at Forbes, part of the team responsible for our signature issues: The Forbes 400, Global Billionaires and America's Richest Families. As a writer, I cover these wealthy business builders as well as other entrepreneurs. Before Forbes, I also reported on entrepreneurs for Inc. magazine and attended Syracuse University's S.I. Newhouse School of Public Communications.

Target Reveals It Has The Same Problem As Wal-Mart

TargetTarget this morning missed the mark on its quarterly sales and offered a disappointing outlook for the rest of the year. In essence, the figures reinforce the message given a few days ago by its top rival, Wal-Mart, that America is again cutting back on what it spends in the face of an uncertain economy.

For the all important back-to-school shopping period, Target expects to earn 55 cents to 65 cents a share in its third quarter. Analysts thought Target would earn at the top of that range, 88 cents a share. (Adjusted earnings should be 80 cents to 90 cents a share, excluding items related to an expansion in Canada.)

Looking further ahead, Target expects adjusted earnings to be near the low end of its previous forecast range, $4.70 to $4.90 a share. Once fully reported, Target should should make closer to $3.75 to $3.95 a share. “For the balance of this year, our U.S. outlook envisions continued cautious spending by consumers in the face of ongoing household budget pressures,” says CEO Gregg Steinhafel.

In response to the dismal numbers, Target shares dropped 1.3% to $67.10 in pre-market trading.

Of course, Target and Wal-Mart haven’t been the only retailers reporting a drop in consumer spending. For example, another Middle America staple, Macy'sMacy's, gave disappointing second-quarter results. The slowdown in shopping is the result of higher payroll taxes and weak wage gains since the recovery’s start. Thinking into the immediate future, it’ll be interesting to watch if it hurts even the dollar stores. The first glimpse will be available tomorrow when Dollar TreeDollar Tree reports its quarterly results, then again on Sept. 4 when Dollar GeneralDollar General reports.

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Large retailers, especially those that pay poorly and avoid providing benefits, are simply going to have to come to terms with the fact that their lackluster sales revenue is due to the continued deterioration of wages in the U.S. When you have an economy that is 90% or so dependent on consumer spending, cheating workers out of a living wage, as is the policy of Walmart, is not only unethical and lousy business practice, but it ensures a large percentage of your customers simply cannot spend disposable income at your stores. I have zero sympathy for large corporations in the U.S. that sit on hundreds of billions of dollars in their coffers instead of providing decently paying jobs. Greed and stupidity are destroying the middle class and the working poor and the result is an economy that will never be as healthy as it once was until wages catch up with the rest of the industrialized world.

This is why we need to raise the minimum wage, to force the companies to pay more because they won’t do it themselves. They would rather let the country go to total ruin that give up more money to their employees. Any company that says it can’t compete if it has to pay higher minimum wages shouldn’t be in business. Costco has proven you can pay proper wages and still be very profitable.

A correlation of same store sales with demographic data might be interesting. There might be a couple forces at play here. A recent trip to a local Target is they, like Wal-Mart, stock mostly popular brands of everyday items. Consumables most people would need so shoppers are going somewhere else, doing without, or some combination of both, which paints two different stories with decidedly different set of consequences. Also, there is the shift to online purchases on must consider. So it begs the question, which stock items are undersold? Macy’s is a slightly different story, but one that has been playing out for years. As with other slightly more upscale retailers—it’s been a race to the bottom as more sophisticated shoppers go online.